Aggregate Supply Curve Explained | Short-Run vs Long-Run

Aggregate supply explains why the same economy has two completely different supply curves — one that slopes upward in the short run and one that stands vertical in the long run. You’ll learn why sticky wages cause short-run supply to slope upward, how real factors like labor, capital, resources, and technology pin down long-run potential output, and what economists mean by monetary neutrality. I walk through equilibrium, recessionary gaps, inflationary gaps, and the self-correction mechanism with clear chart animations showing exactly how the curves shift. Whether you’re studying for AP or college macroeconomics or just want to understand how economists think about booms, recessions, and economic growth, this video gives you everything you need.

Chapters
0:00 – Two Supply Curves: The Paradox
0:25 – What is Aggregate Supply?
0:44 – Why SRAS Slopes Up (Sticky Wages)
1:29 – Why LRAS is Vertical (Potential Output)
2:23 – Equilibrium & Output Gaps
3:06 – Self-Correction Mechanism
4:00 – What Shifts SRAS vs LRAS
4:45 – Key Takeaways

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*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Portfolio Constructs LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.